Common Reporting Standards (CRS) are a hot topic. They are set to dramatically impact the information that banks will share with tax authorities. To help you understand the various implications of these changes we sit down with Neil Baskerville from Satori Consultancy who has been following the issue closely.
For those that have never heard of common reporting can you explain what it is?
“In one sentence; this is the name given to the single global standard for the AUTOMATIC exchange of financial information between individual tax authorities”
There have been announcements recently about changes in common reporting, what are these?
“The first wave of countries begin reporting from Jan 1st 2017 with the second wave from Jan 1st 2018. The IT systems that hold the data needs to meet a certain international standard regarding security which is why some jurisdiction have signed up before others. Most countries outside Jan 1st 2017 and Jan 1st 2018 have committed to OECD to report and will do so over the next 2-3 years.”
How will this impact expatriates?
“It’s irrelevant….it’s locals and expatriates alike. A Spanish resident with $1m of undeclared assets in Switzerland is treated the same way as a British expatriate tax resident in Spain”
Will there be a difference in how the different countries that have signed up to CRS operate?
“No. Their IT systems need to meet a certain international standard for data protection and then Spain and Romania would exchange information the same way as the UK and Mexico. The only difference between countries is the limit to which reporting starts. In South Africa for example, SARS only want details of accounts above $250,000…other countries may be more or less.”
Where is the impact most likely to be felt first?
“Clients with large undeclared portfolios where there has been a systematic refusal for many years to declare wealth whilst they have been a tax resident.”
What should investors who have undisclosed assets or accounts do now?
“If the assets have been earned through employment then consider declaration with then a transfer into a HK ORS, where there will be no further tax liabilities or assault on assets by way of litigation.”
What are the risks involved of not declaring assets or accounts?
“Tax authorities will continue to increase the fines and retrospective action against non-payers and avoiders. This is the new world order.”
If you are concerned that you may be negatively affected by the changes to Common Reporting Standards, we recommend getting in touch with one of our advisers who can help you. A full list of our office locations is available here.
The above was kindly provided by Martin Chungong from United Advisers Group and originally posted at: http://www.unitedadvisersgroup.com/neil-baskerville-common-reporting-standards/